Court Finds Scoopon More "Con" Than Value

Written by David Richards     18/12/2013 | 07:54 | Category: INDUSTRY

They came into the Australian market promising the earth now discount website Scoopon is having to find $1 million dollars after the Federal Court fined them for deliberately misleading consumers and businesses.

Court Finds Scoopon More "Con" Than Value
Often called a "con outfit" by vendors who contacted ChannelNews Scoopon went to market promising ''no risk, big reward'' but in reality it was all risk and no reward. 

The Court declared that Scoopon contravened the Australian Consumer Law (ACL) by making false or misleading representations to:

Consumers about their refund rights, and the price of goods advertised in relation to some of its deals; businesses that there was no cost or risk involved in running a deal with Scoopon, when this was not the case; and a business that 30 per cent of vouchers that would be sold would not be redeemed, when there was no reasonable basis for this representation.
"The ACCC acknowledges Scoopon's cooperation in resolving the matter by consent, which has enabled a more timely outcome to be reached," ACCC Chairman Rod Sims said.

The deception ranged from falsely advertising a ''three-piece'' Samsonite luggage set at one price when in reality it was only one small piece, to deceptively advertising Ugg boots that were not ''knee length'' but ''calf length'' for the same price, the website misled consumers for two years, the Federal Court ruled. 

Businesses who chose to advertise with the group website were also caught out. On its website Scoopon proclaimed ''it costs nothing to be involved with Scoopon'' and ''No risk, big reward''. Yet court documents show the site would refund a consumer the full amount for a voucher but also claim the full amount from the retailer.

The website also promised businesses that a third of vouchers would not be claimed when there was no reasonable basis for that representation, Justice Andrew Greenwood stated in his ruling.

The Australian Competition and Consumer Commission said the website had ''misled consumers regarding their ability to redeem vouchers, their refund rights and the price of goods advertised in relation to some of its deal''.

"The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL. However, this penalty serves as a warning to other businesses in the industry to improve their practices or face action from the ACCC." ACCC executives said. 

"Online competition and consumer issues are a priority for the ACCC. Online traders must understand their obligations are the same as traditional retailers' and must not mislead customers or other businesses. The ACCC will continue to take further action in this area to improve business practices and protect small businesses and consumers," Mr Sims said.

The Court also ordered:
An injunctions restraining Scoopon and its employees from making similar misleading representations for a period of two years;
Scoopon to pay an agreed amount of the ACCC's costs; and
Scoopon to further develop and enhance its existing compliance program to ensure compliance with the ACL.  

In addition, Scoopon was also ordered, as part of a community service order, to prepare for and hold an educational seminar on ACL issues for other online group buying traders who are members of the Association for Data-driven Marketing & Advertising (ADMA).